The Following Standards for Variable Manufacturing Overhead Have Been Established

question 219

Multiple Choice

The following standards for variable manufacturing overhead have been established for a company that makes only one product:
$\begin{array}{|l|r|}\hline \text { Standard hours per unit of output } & 7.8 \text { hours } \\\hline \text { Standard variable overhead rate } & \$ 12.55 \text { per hour } \\\hline\end{array}$
The following data pertain to operations for the last month:
$\begin{array}{|l|r|}\hline \text { Actual hours } & 2,900 \text { hours } \\\hline \text { Actual total variable overhead cost } & \$ 36,975 \\\hline \text { Actual output } & 200 \text { units } \\\hline\end{array}$
What was the variable overhead efficiency variance for the month?

• A) $0.
• B) $16,817 unfavourable.
• C) $580 unfavourable.
• D) $17,397 unfavourable.

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Definitions:

Tax Implications

The effect that various financial transactions and investment decisions have on the tax burden of an individual or business.

Appreciation

Appreciation refers to the increase in value of an asset over time, often due to changes in market demand or economic conditions.

Capital Gains

The profit made from selling an asset at a higher price than its purchase price.

Payout Ratio

A financial metric that shows the percentage of a company's earnings paid to shareholders as dividends.